IRS: Tax glitch affects about 660K returns

IRS: Tax glitch affects about 660K returns

March 13th, 2013by HEATHER HOLLINGSWORTH, Associated Press
in News

KANSAS CITY, Mo. (AP) - A tax-preparation glitch affecting about 660,000 tax returns will delay refunds by as long as six weeks, with customers of the nation's largest tax preparer among those affected.

The Internal Revenue Service said in a statement that a problem with a "limited number of software company products" affected some taxpayers filing a form used to claim educational credits between Feb. 14 and Feb. 22.

The agency didn't name any companies in the statement, which it released Tuesday, but Kansas City-based H&R Block has been informing customers about problems. H&R Block spokesman Gene King said Wednesday that the company isn't saying how many of its customers were affected by the problems with Form 8863.

While the form is used to claim the American opportunity and the lifetime learning credits, the problem only affects the American opportunity credit, which is worth up to $2,500 annually for the first four years of college. The lifetime learning credit, which provides $2,000 for students who aren't eligible for the American opportunity credit, isn't affected, King said.

Form 8863 changed this year, requiring taxpayers to answer additional questions, and the IRS didn't begin accepting it until Feb. 14. King said the changes along with updates the IRS made to its e-filing technology system affected how some tax preparation software interfaced with the IRS.

The IRS said refunds for the affected returns - about 10 percent of the 6.6 million filed seeking the credit - are taking weeks because they require additional review. "We are taking special steps to help taxpayers," the agency said, adding that it is working to reduce waits.

H&R Block's customers have turned to Facebook and Twitter to complain.

The tax preparer said in a statement Monday that the problems have been fixed and that clients are being contacted.

"H&R Block appreciates that this issue may cause problems for our clients and we are doing everything in our power to address the processing of these returns," the statement said. "We will continue to update clients as more information becomes available. We thank our clients for their patience while we continue to work with the IRS to expedite the filing process on their behalf."